Google had one-hour turnaround to counter Facebook’s offers to employees

E-mails show Google was eager to stop Facebook from poaching employees.

It was Google's policy in November 2007 to counter offers to its employees from Facebook within an hour, according to e-mails released last week during the wage conspiracy case going on in California. Former Google CEO Eric Schmidt confirmed in the e-mails that the policy had been in existence for only 24 hours before it leaked outside of the executive management group.

In the lawsuit, Google, Apple, Intel, and Adobe were accused by current and former employees of agreeing not to poach each others' workers to avoid being played against one another to raise salaries. Both sides in the case agreed on a settlement of $324 million, but US District Judge Lucy Koh has yet to approve it. Koh posted the Google e-mails Friday after considering a motion from Google to seal them, according to the Wall Street Journal.

In the e-mails, Vijay Gill, an engineering manager at Google, forwards a snippet of an e-mail he received from an undisclosed source to two executives saying that "Google is open to significantly enhancing the offers to candidates who also have offers from Facebook… within an hour to Googlers who give notice about getting a Facebook offer." One of the executives, Bill Coughran, passed Gill's e-mail along to the executive management group e-mail list writing that the discussion had leaked. "Since I announced our 1 hour policy exactly 24 hours ago we should be embarrassed and disgusted by this leak," Schmidt wrote.

Though Facebook was not one of the companies involved in the alleged conspiracy, another set of documents show Google staffing director Arnnon Geshuri writing that he approached Facebook staffers at a 2008 event and told them "we would be watching them." Koh has expressed doubt that the proposed settlement is fair and could rule at any time, according to the Journal.

Casey Johnston / Casey Johnston is the former Culture Editor at Ars Technica, and now does the occasional freelance story. She graduated from Columbia University with a degree in Applied Physics.

87 Reader Comments

I don't understand the issue with this policy. If Facebook and Google collude to not poach each others' employees, that's a problem. But if they compete for employees, such as by making counter-offers in response to offers, isn't that a case of the free market working?

I don't understand the issue with this policy. If Facebook and Google collude to not poach each others' employees, that's a problem. But if they compete for employees, such as by making counter-offers in response to offers, isn't that a case of the free market working?

Facebook was not part of the no poaching agreement. Google and Apple were not poaching. Facebook was trying to snipe anyone they could.

I don't understand the issue with this policy. If Facebook and Google collude to not poach each others' employees, that's a problem. But if they compete for employees, such as by making counter-offers in response to offers, isn't that a case of the free market working?

As I understand, it's evidence for how things are supposed to work, to the benefit of employees, in the absence of employer collusion.

I don't understand the issue with this policy. If Facebook and Google collude to not poach each others' employees, that's a problem. But if they compete for employees, such as by making counter-offers in response to offers, isn't that a case of the free market working?

Furthermore, people don't like no-poaching agreements because it artificially deflates salaries, but the bit about "Google is open to significantly enhancing the offers to candidates who also have offers from Facebook… within an hour to Googlers who give notice about getting a Facebook offer" is pretty clearly raising that this would have been having the effect of driving salaries up, not down.

(If Google is countering Facebook's offer with a higher salary, then why not go back to Facebook for a counter-counter offer? Even if you fully intend to jump ship to Facebook, you've still driven up the salaries that people can expect to get.)

I don't understand the issue with this policy. If Facebook and Google collude to not poach each others' employees, that's a problem. But if they compete for employees, such as by making counter-offers in response to offers, isn't that a case of the free market working?

Furthermore, people don't like no-poaching agreements because it artificially deflates salaries, but the bit about "Google is open to significantly enhancing the offers to candidates who also have offers from Facebook… within an hour to Googlers who give notice about getting a Facebook offer" is pretty clearly raising that this would have been having the effect of driving salaries up, not down.

(If Google is countering Facebook's offer with a higher salary, then why not go back to Facebook for a counter-counter offer? Even if you fully intend to jump ship to Facebook, you've still driven up the salaries that people can expect to get.)

It's a lot easier to negotiate a counter-offer than a counter-counter due to the circumstances. Also, frankly, most places won't counter a counter because at that point it looks like you were using them to get a raise at your current place.

I think the point is that absent the Google-Apple (and others) no poaching policy, such "counter-offers" would have existed for employees who were presumably offered by Apple and the others involved.

I think this is evidence to show that the 324mn settlement hardly covers the damages to the employees from the collusion because Facebook (who was not party to these illegal acts) could drive up an employee's salary within an hour of offering a job.

I don't understand the issue with this policy. If Facebook and Google collude to not poach each others' employees, that's a problem. But if they compete for employees, such as by making counter-offers in response to offers, isn't that a case of the free market working?

Furthermore, people don't like no-poaching agreements because it artificially deflates salaries, but the bit about "Google is open to significantly enhancing the offers to candidates who also have offers from Facebook… within an hour to Googlers who give notice about getting a Facebook offer" is pretty clearly raising that this would have been having the effect of driving salaries up, not down.

(If Google is countering Facebook's offer with a higher salary, then why not go back to Facebook for a counter-counter offer? Even if you fully intend to jump ship to Facebook, you've still driven up the salaries that people can expect to get.)

It's a lot easier to negotiate a counter-offer than a counter-counter due to the circumstances. Also, frankly, most places won't counter a counter because at that point it looks like you were using them to get a raise at your current place.

Plus most people will feel like scumbags (whether rightfully or not) trying to do that.

IRL, it only gets really ugly for the individual involved considering they have to actually work at these places.

I think the point is that absent the Google-Apple (and others) no poaching policy, such "counter-offers" would have existed for employees who were presumably offered by Apple and the others involved.

I think this is evidence to show that the 324mn settlement hardly covers the damages to the employees from the collusion because Facebook (who was not party to these illegal acts) could drive up an employee's salary within an hour of offering a job.

Then don't ask for money, ask for something like a better parking spot or to have your favorite snack in the vending machine.

I don't understand the issue with this policy. If Facebook and Google collude to not poach each others' employees, that's a problem. But if they compete for employees, such as by making counter-offers in response to offers, isn't that a case of the free market working?

Furthermore, people don't like no-poaching agreements because it artificially deflates salaries, but the bit about "Google is open to significantly enhancing the offers to candidates who also have offers from Facebook… within an hour to Googlers who give notice about getting a Facebook offer" is pretty clearly raising that this would have been having the effect of driving salaries up, not down.

(If Google is countering Facebook's offer with a higher salary, then why not go back to Facebook for a counter-counter offer? Even if you fully intend to jump ship to Facebook, you've still driven up the salaries that people can expect to get.)

Yeah, this should be added as a clarification to the article. The Facebook scenario was "how it is supposed to work." The fact that this wasn't happening between Apple, Google, Adobe, and Intel makes it pretty clear that Google employees, at very least, were directly impacted by these shenanigans.

I think the point is that absent the Google-Apple (and others) no poaching policy, such "counter-offers" would have existed for employees who were presumably offered by Apple and the others involved.

I think this is evidence to show that the 324mn settlement hardly covers the damages to the employees from the collusion because Facebook (who was not party to these illegal acts) could drive up an employee's salary within an hour of offering a job.

And yet, if both sides agreed to the amount, who's the judge to decide it's not fair without any quantitative evidence to support it - he's going on gut feel at that point, not law or analytics

Because the judge at the end of the day is the final arbiter of this. Also as a class action it's important that the settlement be not only fair to all those part of it but also legal.

I think the point is that absent the Google-Apple (and others) no poaching policy, such "counter-offers" would have existed for employees who were presumably offered by Apple and the others involved.

I think this is evidence to show that the 324mn settlement hardly covers the damages to the employees from the collusion because Facebook (who was not party to these illegal acts) could drive up an employee's salary within an hour of offering a job.

And yet, if both sides agreed to the amount, who's the judge to decide it's not fair without any quantitative evidence to support it - he's going on gut feel at that point, not law or analytics

Couple of things:1) There was an Ars article about one of the representative plaintiff engineers filing to reject the settlement since it was submitted by the lawyers without his assent. This article really should've mentioned that one.2) Judge Lucy Koh is a woman.

I think the point is that absent the Google-Apple (and others) no poaching policy, such "counter-offers" would have existed for employees who were presumably offered by Apple and the others involved.

I think this is evidence to show that the 324mn settlement hardly covers the damages to the employees from the collusion because Facebook (who was not party to these illegal acts) could drive up an employee's salary within an hour of offering a job.

And yet, if both sides agreed to the amount, who's the judge to decide it's not fair without any quantitative evidence to support it - he's going on gut feel at that point, not law or analytics

Seems to me almost all cases might come down to gut feeling (believing one side over the other), otherwise the clear law and clear evidence removes the need to go to court. Under your thinking there is no need for "preponderance of evidence" or any other standard be applied, and it's all the same rules in civil courts compared to criminal courts.

Grey areas exist, judges and juries deal with that.

Also, Lucy is a funny name for a man. Clear evidence indicates she is female, yet your gut instinct is she is male. Judges are held to a considerably higher standard of "gut feeling" than you hold for yourself.

I don't understand the issue with this policy. If Facebook and Google collude to not poach each others' employees, that's a problem. But if they compete for employees, such as by making counter-offers in response to offers, isn't that a case of the free market working?

As I understand, it's evidence for how things are supposed to work, to the benefit of employees, in the absence of employer collusion.

Actually still hate it. You shouldn't get a salary increase by getting offers from other companies. You should be getting salary increases on merit.The whole Silicon Valley setup with its 6 month attention span is weird for someone from a country where employment relations have been historically for life. Like dilbert says. Disloyalty gets rewarded. Which sucks.

I don't understand the issue with this policy. If Facebook and Google collude to not poach each others' employees, that's a problem. But if they compete for employees, such as by making counter-offers in response to offers, isn't that a case of the free market working?

As I understand, it's evidence for how things are supposed to work, to the benefit of employees, in the absence of employer collusion.

Actually still hate it. You shouldn't get a salary increase by getting offers from other companies. You should be getting salary increases on merit.The whole Silicon Valley setup with its 6 month attention span is weird for someone from a country where employment relations have been historically for life. Like dilbert says. Disloyalty gets rewarded. Which sucks.

The point is another company values your work more highly than your own employer. Merit can go overlooked. With collusion in place you are at the mercy of your employer's generosity for a raise since he doesn't have to do much to keep you working for him.

You could also compare it to how an athlete's salary is determined. If you want a superstar engineer in your company, you have to give him a superstar salary otherwise he'll jump ship.

324mn is a hilarious joke for a bunch companies which have a combined valuation of over a trillion dollars. We're talking about lost salaries in the hundreds of thousands over multiple years. The settlement should be over a million net (of attorney fees) for each plaintiff. And that's arguably before you get to anything potentially punitive.

I don't understand the issue with this policy. If Facebook and Google collude to not poach each others' employees, that's a problem. But if they compete for employees, such as by making counter-offers in response to offers, isn't that a case of the free market working?

I don't think this is what you think it is. The 1 hour counteroffer is not the issue.

What this really seems to be is an effort by Google to try to redirect some of the negative PR that it has been getting over this dispute.

And yet, if both sides agreed to the amount, who's the judge to decide it's not fair without any quantitative evidence to support it - he's going on gut feel at that point, not law or analytics

The person specifically empowered to decide whether or not it is fair?

But here's a real answer:

In a regular lawsuit, the two parties would settle and the judge would sign off on it. But this is a class action, and it doesn't work like that.

Basically, a class action lawsuit is when a couple representative members sue and tell the judge that many other people are in identical circumstances to them. The judge will certify criteria that defines the class, and anybody who fits that criteria is de facto in the class. They have to specifically opt out to not be covered and to retain their right to sue individually over the same issue. In this particular case, it looks like the class might include somewhere around 64,000 people.

At this point the lawyers no longer just represent the people who brought the lawsuit, they represent everybody. That's where the judge comes in. She has to decide if the settlement is fair not only to the people officially represented, but to every person touched by the case. The lawyers want to take their chunk and run, but is it fair to make up for what the illegal behavior cost? $324 million split 64,000 ways comes out to just about $5,000 each (and that's not including the chunk the lawyers are going to take out first). The judge has to decide if the average employee lost more than that as a result of the actions of the companies involved. If so, why should she certify damages less than people were actually damaged?

TL;DR: Class actions require the judge to sign off that the settlement is good for the entire class.

(If Google is countering Facebook's offer with a higher salary, then why not go back to Facebook for a counter-counter offer? Even if you fully intend to jump ship to Facebook, you've still driven up the salaries that people can expect to get.)

I don't understand the issue with this policy. If Facebook and Google collude to not poach each others' employees, that's a problem. But if they compete for employees, such as by making counter-offers in response to offers, isn't that a case of the free market working?

I don't think this is what you think it is. The 1 hour counteroffer is not the issue.

What this really seems to be is an effort by Google to try to redirect some of the negative PR that it has been getting over this dispute.

Kinda hard to do that when the source of this info is court docs. And they themselves didn't want this to be leaked either.

I don't understand the issue with this policy. If Facebook and Google collude to not poach each others' employees, that's a problem. But if they compete for employees, such as by making counter-offers in response to offers, isn't that a case of the free market working?

As I understand, it's evidence for how things are supposed to work, to the benefit of employees, in the absence of employer collusion.

Actually still hate it. You shouldn't get a salary increase by getting offers from other companies. You should be getting salary increases on merit.The whole Silicon Valley setup with its 6 month attention span is weird for someone from a country where employment relations have been historically for life. Like dilbert says. Disloyalty gets rewarded. Which sucks.

The point is another company values your work more highly than your own employer. Merit can go overlooked. With collusion in place you are at the mercy of your employer's generosity for a raise since he doesn't have to do much to keep you working for him.

You could also compare it to how an athlete's salary is determined. If you want a superstar engineer in your company, you have to give him a superstar salary otherwise he'll jump ship.

Yeah but 99% of people are no superstars (by definition). And even though Hollywood depicts scientists as people who suddenly have an eureka moment its mostly a hard slog through years and years of hard work. That might be a bit different for web applications where single people have huge leverage but in most situations you need a good team and not superstars. And a team gets pretty pissed of, if one of them gets payed better not because he is better but because a Facebook headhunter found his name on Linkedin.

In the end you have the individualistic rapid turnover of Silicon Valley which seems to turn the technological cauldron like no other place and results in almost all big internet companies coming from a single metropolitan area. And you have more social societies like Japan and to a lesser extent Europe where employees historically worked for life and you might not earn crazy salaries like at Google but you wouldn't get kicked out if the company had a bad quarter. Which seems to do wonders if you want to create complex machinery like cars or power plants that require lots of longterm knowledge, people and company being loyal to each other and working together for a long time. Not saying that one is better than the other. Just saying that this "You need to extract the maximum from a company" mindset is not necessarily the only possible approach. But it obviously needs to come from both sides.

I don't understand the issue with this policy. If Facebook and Google collude to not poach each others' employees, that's a problem. But if they compete for employees, such as by making counter-offers in response to offers, isn't that a case of the free market working?

As I understand, it's evidence for how things are supposed to work, to the benefit of employees, in the absence of employer collusion.

Actually still hate it. You shouldn't get a salary increase by getting offers from other companies. You should be getting salary increases on merit.The whole Silicon Valley setup with its 6 month attention span is weird for someone from a country where employment relations have been historically for life. Like dilbert says. Disloyalty gets rewarded. Which sucks.

My experience in the Valley says that merit doesn't matter nor does it have a place in the workplace.

I think the point is that absent the Google-Apple (and others) no poaching policy, such "counter-offers" would have existed for employees who were presumably offered by Apple and the others involved.

I think this is evidence to show that the 324mn settlement hardly covers the damages to the employees from the collusion because Facebook (who was not party to these illegal acts) could drive up an employee's salary within an hour of offering a job.

And yet, if both sides agreed to the amount, who's the judge to decide it's not fair without any quantitative evidence to support it - he's going on gut feel at that point, not law or analytics

I think because the damage that was done was far more than the paltry 324 million in 'damages' they're agreeing to. That amount is nothing compared to what these companies saved/pocketed because of their illegal deals.

I think all these companies that participated in this should get hit extremely hard for it.

$4000 fo an employee for five years of depressed wages is literally a token settlement, period. In a five year period unless your employee is keeping you very happy, you are likely to scout around for opportunities, even if for nothing more than to use as a bargaining chip in a raise discussion. That raise would likely be closer to $5k/year, affecting not just the year it happened but every year after that as well (and compounding because functional large companies like Apple tend to do percentage-based merit increases, not target-based increases keeping all employees in a narrow band).

When you are working for Apple, the natural places to look to see what you are "worth" on the market are places like Google. Radio silence on an offer from Google would tend to make the Apple employee think Google wouldn't be interested in their skills, even though they are a strong match for what Google needed.

All of which comes back around to $4k being an insult of a settlement. The settlement should net employees at a bare minimum $5k per year since the start of the practice (or the employee's start date in the company, whichever was later), which would work out closer to $45k for the chunk of the employees there at the start of the period, and half that for those who squeaked into the class criteria at the tail end of the period in question.

I would also argue the settlement is far too small and frankly the Federal government should have stepped in and investigated criminal charges against the companies involved.

The penalty for getting caught in this kind of wage depressing conspiracy should be at least 10x what the companies gained from the practice so as to deter other industries and companies from doing the same. Frankly, in 5 years the same companies could get caught doing this again because they made a profit from it.

Anything less than an 11-figure judgement followed by several shitbag Google and Apple execs dragged out of their homes in handcuffs is a fucking insult and travesty of justice.

This was unequivocally organized criminal behavior, and the only reason they aren't in jail already is because they either died to escape justice, or money made them above the law.

This should be the trumpeted legacy of Steve Jobs. Where was that in the bullshit tribute books and movies? Remember him for what he really was: A white-turtlenecked criminal who fucked over and robbed thousands of hard working people who sacrificed for his vision.

This should be the trumpeted legacy of Steve Jobs. Where was that in the bullshit tribute books and movies? Remember him for what he really was: A white-turtlenecked criminal who fucked over and robbed thousands of hard working people who sacrificed for his vision.

Jobs would be aghast at such a horrid accusation: he wore black turtlenecks, not white!

While I agree that the settlement amount here is paltry, what is being lost is that the companies are not being accused of colluding to not hire each others' employees. They are accused of colluding to not actively recruit from each other. There is a big difference. Nothing prevented an Apple employee from applying for a job at Google and getting a better salary -- that is not at issue in this suit. Apple and Google just agreed that Google would not cold-call an Apple employee and try to get them to jump ship.

The people who were actively seeking to improve their lot were probably able to do so, assuming that they were semi-competent in their particular discipline. It is only those that were comfortable in their existing situation that may have suffered.

While I agree that the settlement amount here is paltry, what is being lost is that the companies are not being accused of colluding to not hire each others' employees. They are accused of colluding to not actively recruit from each other. There is a big difference. Nothing prevented an Apple employee from applying for a job at Google and getting a better salary -- that is not at issue in this suit. Apple and Google just agreed that Google would not cold-call an Apple employee and try to get them to jump ship.

The people who were actively seeking to improve their lot were probably able to do so, assuming that they were semi-competent in their particular discipline. It is only those that were comfortable in their existing situation that may have suffered.

Nope, in many cases folks who moved to jump companies were blacklisted at the request of the management at their originating firm.

While I agree that the settlement amount here is paltry, what is being lost is that the companies are not being accused of colluding to not hire each others' employees. They are accused of colluding to not actively recruit from each other. There is a big difference. Nothing prevented an Apple employee from applying for a job at Google and getting a better salary -- that is not at issue in this suit. Apple and Google just agreed that Google would not cold-call an Apple employee and try to get them to jump ship.

The people who were actively seeking to improve their lot were probably able to do so, assuming that they were semi-competent in their particular discipline. It is only those that were comfortable in their existing situation that may have suffered.

Nope, in many cases folks who moved to jump companies were blacklisted at the request of the management at their originating firm.

In the most recent revelations regarding Lucasfilm and Pixar, the companies had an agreement where if an employee interviewed and the interviewing company decided to make an offer, they would first contact his manager and basically give the other company right of first refusal - if the current employer countered higher, they would not get into a bidding war.

As this behavior is all quite clearly criminally illegal, then yes many celebrated tech CEOs should be prosecuted. Avoiding that fate would have been as simple as not breaking the law.... and we are not talking about a minor oversight here, this is an enormous conspiracy, so there is absolutely no excuse.

That said, I have a few other observations about the situation:

Yes, Jobs, Larry, Sergey, George, Ed, etc. are scumbags for being involved in this, but from the very high-level perspective, they still deserve credit for creating tens of thousands of 6-figure jobs, especially when the rest of the US economy isn't exactly keeping jobs here. Building companies that create tens of thousands of great jobs and then being jerks and keeping employee wages down a bit is still a better overall contribution to society than staying home and smoking pot in mom's basement.

Another important take-home from this article is that eventually, market forces work. Refusing to compete, even if you make a gentlemen's agreement with your buddies in industry not to compete, is only stable as long as everyone plays along. As soon as someone, Facebook in this case, decides to crash the party and just start buying everyone out, the lazy assholes have to panic. I am honestly surprised we haven't seen a shareholder lawsuit over this, although that may yet happen. In addition to the lawbreaking, as a shareholder of several of the companies involved I am not exactly thrilled to hear that they were refusing to compete as hard as possible for the best talent, which in my opinion is a breach of the executive's fiduciary duty to me.

As a broader social problem, I do see an overall psychological issue with American workers, loyalty, and drive to move up. It seems that we are still recovering culturally from those few post-war decades where people could expect to get a job with a high-school degree and have it for life. Now that is no longer the case, and companies seem pretty comfortable with that, but we still seem to be raising a workforce that feels guilty about negotiating salary, guilty about looking for a new job, guilty about quitting, etc. etc. Americans should be raised by their parents, school teachers and college professors to aim high, ask for more, negotiate, and start thinking about the next job the day they start a new one.

Another important take-home from this article is that eventually, market forces work.

They didn't stop their illegal activity because of Facebook. They stopped it because they got caught violating people's rights in a somewhat modern, somewhat civilized country with a semi-functioning legal system.

Someone on the trusted email chain either deliberately leaked the details to someone, or was stupidly careless with what they did with the information. If I were part of Google management I would be very pissed off with that individual. What other privileged information are they sharing with inappropriate audiences?

As a broader social problem, I do see an overall psychological issue with American workers, loyalty, and drive to move up. It seems that we are still recovering culturally from those few post-war decades where people could expect to get a job with a high-school degree and have it for life. Now that is no longer the case, and companies seem pretty comfortable with that, but we still seem to be raising a workforce that feels guilty about negotiating salary, guilty about looking for a new job, guilty about quitting, etc. etc. Americans should be raised by their parents, school teachers and college professors to aim high, ask for more, negotiate, and start thinking about the next job the day they start a new one.

I think that problem (I'm not sure you can actually call it that) has solved itself already. Particularly with regard to those who have entered the workforce in the last ten years.

I'm in my twenties. People my age, they saw their parents working for these grand industrial empires. General Motors (or any of the other Big 3). General Electric. IBM. HP. DEC. Honeywell. Dow. Bell. The list continues.

These were the kinds of companies that you started at when you were 22 and stayed with until you were 65. They weren't always glamorous. They were bureaucratic, opaque, Kafkaesque. They didn't make sense, seeming to deform the laws of reality and logic by their mere existing. But they were there, monuments of concrete and cash. And they would employ you, and you could rely on that employment.

Sure, some companies went out of business. But IBM would always be there. Boeing would always be there. GM would always be there. They were like the federal government. Their continued existence was assured. They would be there.

Now? Watch young people in the workforce. Competitor A is offering better salaries. Fuck you. Competitor B is working on cooler stuff. Fuck you. Competitor C is in a nicer part of the country. Fuck you.

Job-hopping isn't stigmatized anymore. It's being enterprising. It's looking out for yourself, because no one is looking out for you. There is no more comfortable cube-farm layer of middle-management flab to disappear into and pull a paycheck for the next thirty-five years. No pension. No union to back you up. So - devil take the hindmost. Get what you can, while you can, because it might not last. And any manager or executive whining on about "the decline of employee loyalty" or "no sense of pride/ownership/[etc]" has nothing more than my complete and utter contempt. Because I should expect him to turn around and sell me down the river at his earliest convenience. And he will.